A report released last week by the Public Investors Arbitration Bar Association (PIABA) pointed out nine big brokerages for advertising as if they are fiduciaries, but denying that standard and renouncing any requirement to avoid conflicted advice in private arbitration hearings.

Those nine brokerages are: Merrill Lynch, Fidelity Investments, Ameriprise, Wells Fargo, Morgan Stanley, Allstate, UBS, Berthel Fisher, and Charles Schwab.

Fiduciaries have a legal requirement to put client interests ahead of all others.

The report includes samples of misleading advertising from major brokerage firms AND the firms’ legal repudiations when their brokers are sued for losses caused by misconduct.

Allstate
Their advertisements say: “Your’e in good hands.”
Their lawyers say: “Allstate Financial Services owed no fiduciary duty to Claimants, and, therefore, no such duty was breached.”

UBS
Their advertisements say: “Until my client knows she comes first. Until I understand what drives her. And what slows her down. Until I know what makes her leap out of bed in the morning. And what keeps her awake at night. Until she understands that I’m always thinking about her investment. (Even if she isn’t.) Not at the office. But at the opera. At a barbecue. In a traffic jam. Until her ambitions feel like my ambitions. Until then. We will not rest. UBS.”
Their lawyers say: “[A] broker does not owe a fiduciary duty to his customer in a non-discretionary account.”

Merrill Lynch
Their advertisements say: “It’s time for a financial strategy that puts your needs and priorities front and center.”
Their lawyers say: “Respondents did not stand in a fiduciary relationship with Claimants.”

Morgan Stanley
Their advertisements say: “Having an intimate knowledge of blue chips and small caps is important. But even more important is an intimate knowledge of you and your goals. Get connected to a Morgan Stanley Financial Advisor and get a more personalized plan for achieving success.”
Their lawyers say: “Claimant’s claim seeks to impose ‘fiduciary’ obligations and duties on Respondents that only arise in very limited circumstances that do not exist here, i.e. where Respondents are given discretionary trading authority over Claimant’s accounts.”

The report succinctly summarizes this disparity:
“On one hand, the firms boast that they offer unconflicted, trustworthy advice while, on the other hand, those same firms argue they are little more than salesmen with a single duty: to execute trades in customers’ accounts.”

Sources:
MarketWatch
USN